Solar stakeholders voice concern for Idaho Power proposal looking to change compensation for excess energy
Idaho Power is looking to make sizable adjustments to the level at which solar users in the state are compensated for the extra power they generate. While the company is presenting the changes as being reflective of market energy prices, solar users, advocates and installation businesses have expressed concern over what the changes would mean for their bottom line and the broader adoption of clean energy in the state.
An April 1 proposal submitted by Idaho Power to the Idaho Public Utilities Commission (IPUC) is looking to adjust the Export Credit Rates (ECRs) for power generators as soon as June 1 and on an annual basis moving forward.
These credits are provided to solar power owners, including residential and business users, who generate excess energy that is then transmitted back to the power grid and resold by Idaho Power to other customers.
{p class=”p2”}Jordan Rodriguez, a spokesperson for Idaho Power, said the April 1 filing with proposed ECRs was not a “new thing,” but rather an implementation of a change in compensation structure that was approved by the IPUC in December of 2023. In the ruling, the IPUC granted Idaho Power the ability to switch from a “net metering” to a “net billing” system as well as designate time frames for ECR compensation in accordance with the hours of the day that electricity sees the highest demand and the time of year that sees the highest demand, which is during the summer months, as previously reported by the Idaho Press.
Solar panel owners who purchased or installed solar panels prior to December 2019 remain under the net metering rate where the excess power sold to Idaho Power was compensated at about the same rate that Idaho Power sells electricity to other users. In an email, Idaho Power said that about 5,300 individuals with on-site power generation are subject to this legacy credit rate.
An additional 14,000, however, do not have this legacy status now feel that the change in credit last year, as well as the proposed adjustment for this year, have altered the benefit that they had received and had believed they would continue to receive by installing solar panels.
The existing per-kilowatt hour export credit rate compensates solar and other on-site generators with 16.99 cents for summer on-peak, 5.65 cents for summer off-peak and 4.84 cents for non-summer generation. Under the new proposal, Idaho Power is looking to decrease these rates to 14.05 cents for summer on-peak, 1.76 cents for summer off-peak and 0.954 cents for all hours during the non-summer season. In the case of the summer off-peak compensation, this decrease is as nuch as 80% from the prior rate.
The IPUC has received dozens of public comments on the export credit rate changes from solar users across Idaho with some going as far as describing the change as a “bait-and-switch” and a “rug-pull.”
When Monica Dickson, a Boise resident, installed solar panels for her home and for her mother-in-law’s home in 2021, she thought they were a “sound investment” to get as power demands — and by extension power costs — in the Treasure Valley were expected to rise as the population grew. Prior to the change to net billing, Dickson said she was able to have her power bill fully covered through her solar installation with additional power left over. This investment, which was perceived as a way to avoid rising energy costs, was particularly important for her mother-in-law, a retired nurse who lives on a fixed income, she said.
While their power bills were once being offset through the net metering arrangement, the shift to net billing, and the reduction in ECR has left them paying Idaho Power again, Dickson said.
“I do understand they’re doing a decrease this year, but it’s just not adding up for cutting our generation (reimbursement) by like 80%,” Dickson said.
Steve Berggren, another Boise resident, said he installed solar panels on his home at a cost of $27,000 last September. While he had purchased them knowing that Idaho Power had already moved to its net billing arrangement, the pricing for Berggren “still made sense” with the included tax credit. Unlike Dickson, however, Berggren’s panels were paid in full.
“They’re faced with a tough situation especially as they cut (credit rates) further,” Berggren said of solar users who were financing.
Berggren said Idaho Power’s new proposal has made him consider whether a battery installation would be worthwhile since he would be able to draw on generated energy without selling it back to Idaho Power at a rate far lower than what he buys it for.
“It definitely doesn’t make me want to put power in the grid and give it to Idaho Power, knowing that they’re charging a neighbor 10 times what they’re paying me,” Berggren said.
Idaho Power’s current tiered pricing — which adjusts for how much electricity a customer uses as well as the time of year that electricity is being used — charges customers from 8.7 cents per kilowatt hour to 14.1 cents per kilowatt hour for residential electricity.
Idaho Power said the proposed reimbursement change was a more accurate reflection of the value provided by on-site generators, which includes solar users.
“The company’s goal through this was to make the pricing fair for all customers and not overcompensate those with on-site generation at the expense of everyone else,” Rodriguez said.
These customers account for 2% of Idaho Power’s customer base, whereas 98% do not have this infrastructure. Rodriguez said the prior arrangement, which compensated customer-generated electricity at a rate about equal to what their energy was sold at, left the majority of Idaho Power’s customer base “subsidizing” the power-generating customers.
These customers did not face the same input costs as Idaho Power, which primarily uses hydroelectric plants to generate the electricity used by customers — the price that Idaho Power sells energy to customers is an all-encompassing rate that includes the cost to generate, transmit and distribute power as well as compensation for the employees who facilitate this at all hours of the day, Rodriguez said.
Under the April proposal, ECRs will be shifting compensation to better align with what Idaho Power pays for wholesale energy on the open market, which is purchased from outside entities in and around the state when energy demands exceed what Idaho Power’s systems can produce. The wholesale energy price saw a sizable decrease from 2022 prices, when the previous values were calculated, compared to 2024 prices, which is what the ECR adjustment was based on, Rodriguez said.
“It’s worth noting that when the energy prices are lower, when market energy prices are lower, that’s generally good news for our customers, because it keeps our power supply costs lower, which leads to lower prices,” Rodriguez said.
The justification for the change to net billing (approved at the close of 2023) stems from the findings of a 2022 Value of Distributed Energy Resources (VODER) study that was conducted by Idaho Power at the behest of the IPUC to determine how to fairly compensate individuals and businesses that generate power and sell it back to the power grid. After the findings and conclusions of the study were approved by the IPUC, Idaho Power moved in October 2023 to establish a compensation plan according to the season and time of day that excess electricity is being generated, rather than the prior flat rate that has since been reserved for the aforementioned legacy on-site power generators.
The findings in Idaho Power’s in-house study, however, differed from an independent, Sierra Club-commissioned study by Crossborder Energy, a California-based firm that provides consulting services for regulatory issues pertaining to the natural gas and electricity sectors.
This study, released in September 2022, posited that Idaho Power had undervalued the financial benefit of the excess electricity generated by solar owners, determining a fair average export credit rate would be 18.3 cents per hour, well above the current average export credit rate of 6.18 cents per kilowatt hour.
Lisa Young, the Idaho Chapter Director of the Sierra Club, said the study was commissioned due to the potential for “extreme bias” that could arise from a study that has a vested interest in maximizing its profits and limiting the de-centralization of power generation in the state that can be achieved, in part, through broader solar panel adoption.
“At the very least, the commission should take a second look at the calculation framework,” Young said.
Young also noted that the change in compensation would make solar panels too much of a financial burden for many and likely cut into Idaho Power’s “laudable” goal of using 100% clean energy by 2045.
“It basically makes it very clear to us that the utility has this clean energy goal, as long as it can own … those clean energy assets,” Young said.
Though Idaho Power buys and sells power to and from solar panel owners, the process of buying and installing solar panels is done through separate solar panel installation companies, of which there are several that operate throughout the state of Idaho.
Tyler Grange, owner of Boise-based Idahome Energy, recalled how the client consultation process was simpler under the past 1:1 ratio since an individual that consumed 10,000 kilowatt hours in a year would just need a solar system that could produce 10,000 kilowatt hours annually to have their power needs covered, he said.
With the peak time rates and summer rates that started in 2024, the calculation has become more difficult to tell homeowners when they can expect to break even or if they would get a return from their solar investment since their costs depend on several lifestyle variables that are difficult to account for. The significant credit adjustment this year only adds to the variability and is the “hardest part” of the April proposal for solar installation companies, he said.
As a business owner in the space, Grange said setting a maximum annual percent change value or locking in an ECR for several years would be preferred to an annual adjustment, with the April proposal being the first of these adjustments since the change to net billing.
“Just so it gives us some sort of stability on how to serve the community the best that we can,” Grange said. “Because if that goal post is always being moved, it makes it really hard … for us to figure out how to serve people the right way.”
If Idaho Power’s proposal were to be approved, Grange said he expected there to be an increase in the number of customers that implement battery storage in addition to their solar panels as the benefits of selling electricity back to Idaho Power declines. At present, about 40-50% of Idahome customers include on-site battery storage, a number he predicted could grow to near 70% if the cost of reselling electricity decreases as proposed.
These backup battery systems, which can range in cost from $12,000 to $25,000 depending on the size of the installation, would largely eliminate a potential return on investment, however, and make solar adoption a luxury item for those strictly interested in “becoming their own utility power plant,” Grange said.
Alex McKinley, owner of Empowered Solar, in Boise, said clients could be investing in solar for a range of reasons including environmental concerns, energy independence, or, for retirees on fixed incomes, a more consistent power bill over time. The changes in compensation in just the last two years, and by extension the financial viability of solar systems, has left current and prospective solar buyers with “uncertainty and confusion,” he said.
For many the cost of investing in battery systems would likely prove too costly to justify, bringing knockdown effects on local solar installation businesses who may have to downsize or otherwise reduce overhead costs to accommodate for lowered solar adoption rates. If this decline in adoption were significant enough, it could be felt by past solar adoptees who may be “left high and dry” if their respective solar installer — who upholds warranty claims for a customer’s solar system — is no longer able to service them, Grange said.